Safe investing should be the aim of anyone thinking of investing — especially for the first time. Of course safe investing means different things to different people.
To some the idea of safe is simply to put their money on deposit. For others, it’s choose the right bond, or putting money into real estate.
While any investing always carries a certain amount of risk especially over the short term it is possible to minimize that risk. Safe investing is really just a matter of following some common sense guidelines when it comes to that risk.
Some of the best known and most successful investors of all time such as Ben Graham, Warren Buffett and Peter Lynch are all known for looking for straight forward opportunities and safe investments to put their money into. Warren Buffett’s approach of “KISS” or “Keep It Simple Stupid” is something that any novice investor can follow. He advocates never placing money into any venture that he doesn’t immediately understand such a micro technology.
A second guideline for investors is to do your own checking aka “Due Diligence” before parting with any cash. At Harbor City, we even provide investors with a “Due Diligence Checklist” they can use in case they don’t have their own. As Buffett says “A public-opinion poll is no substitute for thought.” If you are planning to make an investment doesn’t it make sense to check things for yourself? After all no one will ever take as much care of your money as you will yourself.
One thing which many people tend to forget, especially when they first start to invest in the markets, is that they are investing for the medium to long term. If you have that clearly in the forefront of your mind you will make much safer investment decisions. That’s simply because you’re far less likely to panic if you see the price of your stocks fluctuate dramatically.
Finally, another basic is something you no doubt heard as a child – “never put all your eggs in one basket”. It’s as true today as it ever was and will be forever no doubt. Of course we all want to be in early on the latest, greatest stellar investment but to put all your cash into that one investment isn’t investing — its gambling.
By following these few simple guidelines you can ease your mind and sleep soundly at night without fretting about your investment portfolio. Maybe you won’t have quite so many massive winners but you will certainly enjoy more safe investing.
JP Maroney is Founder and CEO of Harbor City Capital Corp a global alternative asset manager headquartered in Melbourne, Florida.